distressed-property-basicsAnyone old enough to remember the eighties movie The Money Pit will think twice about purchasing a distressed property that needs some serious repair to bring it up to standard and then either live in it or sell it on to a less ambitious buyer in better condition than which you found it.

Of course, with the support of professionals and a really great discount price, you might be tempted to take on such a challenge. As long as the foundation is not cracked and there is no mold growing anywhere in the structure you might find that you have a hidden gem.

Discounts Are The Keys To Distressed Properties

When you purchase a distressed property you are going to negotiate a discount from the full market value before you consider the repairs. You will need to have inspections and appraisals and estimates from vendors. Large repairs will need to have estimates from three vendors.

Once you know what it will take to get the house in shape you can then subtract that cost from the discounted price. This will be the upper limit of what you will be willing and able to pay.

If you are one of those fortunate people who have the ability to put cash into such a project and close rapidly you will be in an extra powerful position. For the sake of speed of transaction many distressed property owners will accept an even lower price to get the property off their hands then with hard work and smart moves you can realize the equity or just make it your dream home in just the way that you wish.

Geography Makes Real Estate Worthwhile

The first consideration in buying real estate in general and particularly distressed property has to be the location. The old saying that the three things that matter most in real estate are location, location, location is doubly true for homes that are in bad repair.

It is always better to purchases the worst home in the best neighborhood, as far as property values are concerned because you will have more favorable comparable. There will also be lots of good will from neighbors when you fix up the home that has been ruining their views and dragging down values.

Attitude Equals Savings

There will always be risks and hidden faults when you are buying older properties. You must take that into account when you make your offer. You may be surprised at how low an offer you can make. Of course there will always the owners that overvalue the abandoned, rundown home for which they are demanding full market value. You don’t need to deal with them.

As a buyer willing to invest in repairs and maintenance you are in a position of strength and you should not be afraid to walk away from the seller demanding too much money for too little house. Make your distressed property purchase wisely and growing equity and the satisfaction of creating your own dream home will doubly reward you.